Overseas property investors looking to invest in the United States may want to check the level of property tax they will need to pay on their investment.
Local governments are typically in charge of implementing property tax on buildings and properties within their jurisdiction. Most of that money goes toward funding public schools, public safety and maintenance – such as paving roadways or street cleaning – needs in the area.
This means that property tax can vary depending on which state you choose to invest in.
Lawrence Yun, the chief economist for the National Association of Realtors, said: ‘Property tax is a critical piece of information in the home purchase decision and something a buyer should ask about before making the purchase.’
Municipalities adjust property tax rates on an annual basis depending on their changing fiscal needs and to compensate for inflation. The value of a home can fluctuate depending on renovations made to the building or improvements in the area, among other factors.
That said, it’s worth noting the amount you have to fork over in property taxes depends on where you live or invest in your US property.
Homeowners typically pay a 1.2 percent property tax rate, but this can vary from state to state.
To give potential homebuyers an idea of how much the rate differs in each state, USA Today teamed up with the Lincoln Institute of Land Policy to rank property taxes based on location. They ranked property taxes among states by the effective tax rate for homeowners, rather than the median tax paid, which is affected by overall home values.
New Jersey was found to have the highest property tax among all 50 states. The Garden State has a median tax rate of 2.35 per cent, paying around $7,410 every year. Illinois and New Hampshire are close behind with 2.3 per cent and 2.15 per cent, respectively. In Illinois, the median tax amount paid totals $3,995 on average while New Hampshire homeowners pay around $5,100.
Hawaii is apparently one of the most affordable places to live, with a 0.27 per cent property tax rate. The median tax paid per month in paradise is around $1,406. And in Alabama, locals only pay around 0.43 per cent, which equals a $543 annual median tax payment.
Based on the data, these are the 10 best – and worst – states for property tax and their average tax rate. Overseas property investors may want to check their preferred destination
- New Jersey: 2.35 per cent
- Illinois: 2.3 per cent
- New Hampshire: 2.15 per cent
- Connecticut: 1.97 per cent
- Wisconsin: 1.96 per cent
- Texas: 1.9 per cent
- Nebraska: 1.85 per cent
- Michigan: 1.78 per cent
- Vermont: 1.74 per cent
- Rhode Island: 1.63 per cent
- Hawaii: 0.27 per cent
- Alabama: 0.43 per cent
- Louisiana: 0.49 per cent
- Delaware: 0.54 per cent
- Washington, D.C.: 0.56 per cent
- South Carolina: 0.57 per cent
- West Virginia: 0.58 per cent
- Colorado: 0.6 per cent
- Wyoming: 0.61 per cent
- Arkansas: 0.62 per cent